For the A. Y. 1996-97, the petitioner assessee had filed
the return of income on 27.08.1996. The assessee had computed capital gain by
adopting the market value of the asset as on 01.04.1981, determined by the
registered valuer to be the cost of acquisition by exercising option u/s.
55(2) of the Income-tax Act, 1961. The assesee received a notice from the
Valuation Officer informing that a reference was made by the Assessing Officer
on 26/04/1996 u/s. 55A of the Act.
“i) Clause (b) of section 55A of the Income-tax Act,
1961, can be invoked only when the value of the asset claimed by the
assessee is not supported by the valuation report of a registered valuer.
For invoking section 55A of the Act, there has to be a claim made by the
assessee, before the Assessing Officer can record his opinion either under
clause (a) or clause (b) of section 55A of the Act to make a reference to
the Valuation Officer.
ii) In so far as the fair market value of the property as
on 01/04/1981, was concerned, the petitioner had claimed it at a sum of
Rs.6,25,000 as per the registered valuer’s report. Therefore, the Assessing
Officer was required to form an opinion that the value so claimed was less
than the fair market value. The estimated value proposed by the Valuation
Officer was shown at Rs.3,97,000 which was less than the fair market value
shown by the assessee. Therefore, clause (a) of section 55A of the Act could
not be made applicable.
iii) Clause (b) of section 55A of the Act can be invoked
only in any other case, namely, when the value of the asset claimed by the
assessee was not supported by an estimate by a registered valuer. In the
facts of the present case, clause (b) of section 55A of the Act also could
not be invoked.
iv) The reference was made on 26/04/1996, whereas the
return of income had been filed by the assessee only on 27/08/1996. Hence on
the date of making the reference by the Assessing Officer, no claim was made
by the assessee and the Assessing Officer could not have formed any opinion
as to the existence of prescribed difference between the value of the asset
as claimed by the assessee and the fair market value. Therefore also, the
provisions of section 55A of the Act, could not be resorted to.
v) The only ground on which reference was made to the
Valuation Officer was that the value declared by the assessee as on the date
of the execution and registration of the sale deed was lower by more than
25%. There was no provision in the Act which permits the Assessing Officer
to disturb the sale consideration, at least section 55A of the Act could not
be invoked for the said purpose.
vi) The reference to the valuation officer was not
valid”.
